Q3 FY16 | March 2016
For the quarter ending 31 March 2016 released 27 April 2016 1
HIGHLIGHTS
Strong financial position with cash of $101 million and total liquidity of $178 million
Continued focus on disciplined capital expenditure and cost reductions; FY16 capex guidance reduced
by c. 30%
FY16 production guidance narrowed to 1.0 - 1.05 mmboe, following delays to connection of Vanessa
gas field
Commencement of Phase 1 appraisal work program for Western Surat Gas Project
Protected revenue with the successful execution of a hedging program for H1 FY17
During the third quarter of FY16, Senex Energy (Senex, ASX:SXY) maintained its strong financial position and commenced the Phase 1 work program for the Western Surat Gas Project. Against the previous quarter, highlights include:
Cash balance of $100.5 million, up by 1%. Senex has $178 million of total liquidity available (up from $177 million the prior quarter).
Net production of 0.25 mmboe, down 4%, with natural field decline mostly offset by the contribution of new
wells. Net sales volumes of 0.24 mmboe, down 8% compared to the prior quarter.
Sales revenue of $16.7 million, down 8%, with the realised average oil price protected by hedging.
Western Surat Gas Project progressed with the review and consolidation of GLNG technical data with existing Senex data and commencement of the Phase 1 appraisal work program.
Planning progressed on the fracture stimulation and testing campaign for our gas exploration JV program
with Origin Energy, following a two well drilling campaign.
Capital expenditure of $5.5 million, down 26%, with continued focus on capital discipline. FY16 capital guidance revised down to $25 - $30 million.
Production guidance narrowed to 1.0 mmboe - 1.05 mmboe, following delays to connection of Vanessa gas field. The reduced rate of capital investment since January 2015 has an ongoing and cumulative impact on production.
FY16 GUIDANCE Revised Original
CAPEX ($ million) 25 - 30 35 - 45
PRODUCTION (mmboe) 1.0 - 1.05 1.0 - 1.2
For the quarter ending 31 December 2014 2
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 2
Q3 FY16 | March 2016
$21 per barrel of margin benefit realised during the quarter through hedge program.
Senex has protected revenue for one million barrels of oil sales during FY16, guaranteeing an average Brent crude oil floor price of A$72 per barrel for the second half FY16 (assuming an AUD/USD exchange
rate of 0.72).
In March, Senex put an additional series of oil price hedges in place for the first half of FY17. The put options provide revenue protection for 400,000 barrels of oil, without limiting Senex’s exposure to the upside from higher oil prices. Refer to the ASX released dated 9 March 2016 for details.
The implementation of hedges provides downside risk protection and allows the Company to lock in a margin on its oil sales. Senex continues to actively assess opportunities for additional hedging for the FY17 second half and beyond.
Realised average oil price protected by hedging. Sales revenue of $16.7 million,
down 8%.
Sales volumes for the March quarter were 0.24 mmboe, down 8% on the previous quarter, primarily due to natural production decline, partially offset by the contribution of new wells.
The average realised oil price for the March quarter was $70 per barrel, in line with the previous quarter. Crude oil prices remained below the hedged floor price for the March quarter, with the average realised oil price achieved through hedging settlements on sales volumes.
FINANCIAL SUMMARY
SALES March
Quarter
Q3 FY16
December
Quarter
Q2 FY16
Quarter on
Quarter
change
March
Quarter
Q3 FY15
Quarter on
Quarter
change
Sales (mmboe) 0.24 0.26 (8%) 0.31 (23%)
Oil 0.24 0.26 (8%) 0.30 (20%)
Gas and gas liquids - - - 0.00 (100%)
Sales revenue ($ million) 16.7 18.1 (8%) 22.3 (25%)
KEY PERFORMANCE METRICS
March
Quarter
Q3 FY16
December
Quarter
Q2 FY16
Quarter on
Quarter
change
March
Quarter
Q3 FY15
Quarter on
Quarter
change
Net Production (mmboe) 0.25 0.26 (4%) 0.33 (24%)
Net Sales volumes (mmboe) 0.24 0.26 (8%) 0.31 (23%)
Sales revenue ($ million) 16.7 18.1 (8%) 22.3 (25%)
Cash ($ million) 100.5 99.6 1% 63.0 60%
Average realised oil price
(A$ per barrel) 70 70 - 72 (3%)
For the quarter ending 31 December 2014 3
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 3
Q3 FY16 | March 2016
FINANCIAL SUMMARY
CAPITAL EXPENDITURE March
Quarter
Q3 FY16
December
Quarter
Q2 FY16
Quarter on
Quarter
change
March
Quarter
Q3 FY15
Quarter on
Quarter
change
Exploration and appraisal 3.1 4.4 (30%) 11.9 (74%)
Development, plant and equipment 2.4 3.0 (20%) 2.6 (8%)
Total 5.5 7.4 (26%) 14.5 (62%)
Capital expenditure of $5.5 million was incurred in the quarter, with reduced spending
in line with revised annual guidance.
The major components of capital expenditure for the quarter included Vanessa gas field surface facilities,
the Martlet-2 oil development well connection and preparatory work for the Western Surat Gas Project.
The Company has today reduced its FY16 capital expenditure guidance from $35-$45 million to
$25-$30 million. This net reduction is principally a result of a deferral of the planned Surat Basin spend to
allow time to take full account of the GLNG sub-surface production and technical data received
under the GLNG transaction signed in September 2015, and the transaction’s impact on future development
options.
Senex has commenced the Phase 1 work program which will include the drilling of 10 wells in the Eos block
and the completion of 5 wells in the Glenora block to be followed by comprehensive testing. The majority of
this spend is planned for H1 FY17.
Western Surat Gas Project acreage - Surat Basin, near Roma
For the quarter ending 31 December 2014 4
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 4
Q3 FY16 | March 2016
Senex delivered net oil and gas production of 0.25
mmboe for the three months to 31 March 2016.
Oil production was 0.25 mmboe for the period, down 4% on the
previous quarter. Senex’s major producing oil fields continued to
perform in line with expectations.
Natural field decline was mostly offset by the contribution from new
wells, including the Martlet-2 well which was brought online at the
end of January. The Spitfire-7 well contributed a full quarter of
production, having been brought online in October. Productivity
increases were recorded at several Senex fields including the
effect of the shut-in of Growler-6 which continues to drive a net
positive contribution to field volumes (see page 7 for more detail)
as well as Mirage-6 and Ventura-2, as part of the Murta Formation
tight oil pilot project.
Senex expects to deliver full year production of between 1.0 mmboe and 1.05 mmboe with delays to connection
of the Vanessa gas field, awaiting downstream infrastructure availability. Senex is continuing to work with the
downstream infrastructure owner to bring this gas to market as soon as practicable.
The reduced rate of capital investment since January 2015 has an ongoing and cumulative impact on
production.
PRODUCTION
PRODUCTION
March
Quarter
Q3 FY16
December
Quarter
Q2 FY16
Quarter on
Quarter
change
March
Quarter
Q3 FY15
Quarter on
Quarter
change
Net Production (mmboe) 0.25 0.26 (4%) 0.33 (24%)
Oil 0.25 0.26 (4%) 0.31 (19%)
Gas and gas liquids - 0.00 (100%) 0.01 (100%)
Mirage operational base
Dust storm approaching Growler Camp
For the quarter ending 31 December 2014 5
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 5
Q3 FY16 | March 2016
SURAT BASIN
Phase 1 work program commenced on Western Surat Gas Project.
Following finalisation of the sale of the Maisey block to GLNG, Senex has been reviewing the comprehensive
suite of subsurface, production and technical data provided as part of that transaction.
Work program commenced
Since signing a binding 20-year gas sales
agreement under which Senex will supply up to 50
TJ/day of sales gas from its Western Surat Gas
Project to GLNG, Senex has commenced plans for
the Phase 1 work program. The program involves
the drilling of 10 wells in the Eos block and the
completion of 5 wells in Glenora during H1 FY17.
Comprehensive appraisal testing of these wells will
follow. Senex is in discussions with GLNG to reach
agreement on terms allowing the Glenora wells to be
connected to GLNG's gathering network and
processing facilities. The agreement will enable the
sale of raw gas and disposal of produced water
during near term appraisal testing.
Full field development planning underway
Senex is evaluating the most appropriate approach
to full field development including a progressive and
incremental expansion approach. This approach
allows Senex to more effectively manage subsurface
uncertainty, accelerate commercial gas flows and
stagger project funding.
Key work program elements
Key work program elements to achieve first gas
production are underway and on schedule. These
include land access arrangements, cultural heritage
clearance, baseline ecology and waterbore surveys, infrastructure siting surveys, reservoir characterisation
analysis, down-hole reviews and engineering design, along with a plug and abandonment program of legacy
wells.
Senex is currently reviewing the most appropriate regulatory approvals strategy to suit a revised development
approach.
GAS | Western Surat Gas Project
For the quarter ending 31 December 2014 6
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 6
Q3 FY16 | March 2016
COOPER BASIN
GAS | Unconventional gas JVs with Origin Energy
Senex and Origin working to progress
north and south programs
Following on from the successful drilling of the
Efficient-1 and Ethereal-1 wells in October and
January respectively, and the completion of seismic
interpretation in the north, the joint venture has
been actively progressing planning for the next
stage of both the northern and southern work
programs.
In the South, Senex and Origin are agreeing the
optimal fracture stimulation and testing program for
Efficient-1 and Ethereal-1. It is expected that the
initial fracture stimulation program will be completed
this quarter, with flow testing continuing for an initial
period of up to 90 days.
In the North, the Joint Venture is currently
assessing a range of prospective drilling locations,
with the initial two well campaign targeting
large-scale prospective gas resources in the
Patchawarra Trough.
Drilling of Efficient -1 well in Cooper Basin
For the quarter ending 31 December 2014 7
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 7
Q3 FY16 | March 2016
COOPER BASIN
Growler field (Senex 60% and operator)
A shut in test of the Growler-6 well was
undertaken between September and December,
and concluded in January resulting in an overall
enhanced full field recovery.
Results of the shut in test will be included into
reservoir models to aid the Joint Venture to
progress further development opportunities.
Martlet field (Senex 60% and operator)
The Martlet-2 oil development well was drilled in
November 2015, completed and brought online in
January 2016, a month earlier than expected. This
well is performing to expectations and will
accelerate recovery of remaining oil from the
Namur Sandstone.
Murta Formation tight oil project
The tight oil pilot program was progressed
throughout this quarter with the successful fracture
stimulation and flow testing of the Senex oil wells
Mirage-6 and Ventura-2 by Halliburton, in January.
The tests were aimed at appraising the
effectiveness and reservoir characteristics of the
wells with both demonstrating some level of
improved performance. Senex and Halliburton
continue to monitor the well performance of both to
determine next steps for appraisal of the resource.
Field development planning has progressed across
all key fields including Growler, Snatcher, Spitfire
and Worrior. Preliminary results are currently being
used to define the FY17 capital program.
The regional petroleum system model will continue
to be refined and will underpin the development of
drilling prospects for FY17. Budgets for this activity
are being assessed and reviewed with our Joint
Venture parties. Senex will not undertake any
further drilling in FY16.
OIL AND GAS | Exploration and Development
For the quarter ending 31 December 2014 8
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 8
Q3 FY16 | March 2016
CORPORATE
Appointment of Dr John Warburton to the Board
In March, Senex appointed of Dr John Warburton as an independent Non-Executive Director of the Senex Board.
Dr Warburton brings a wealth of global petroleum industry knowledge and expertise. His broad ranging
international experience extends across conventional and unconventional petroleum plays and indigenous
cultures and will enhance the Board’s ability to strategically, commercially and technically high grade
opportunities in the field of exploration.
FURTHER INFORMATION
Media Enquiries: Investor Enquiries:
Ian Davies
Managing Director
Senex Energy Limited
Phone: +61 7 3335 9000
Tess Palmer
Investor Relations Manager
Senex Energy Limited
Phone: +61 7 3335 9719
Karen Cottier
Corporate Communications Manager
Senex Energy Limited
Phone: +61 7 3335 9859
SENEX ENERGY LIMITED
ABN 50 008 942 827
Securities Exchange
ASX: SXY
Share Registry
Link Market Services
Phone: 1300 554 474
Registered Office
Level 14, 144 Edward Street
Brisbane, Queensland 4000
Postal Address
GPO Box 2233
Brisbane, Queensland 4001
Phone +61 7 3335 9000
Facsimile +61 7 3335 9999
Web www.senexenergy.com.au
ABOUT SENEX
Senex is a growth focused exploration
and production company based in
Brisbane. With a 30-year operating
history, Senex holds extensive onshore
oil and gas acreage in the Cooper and
Surat Basins. Senex operates the
majority of its assets, produces over one
million barrels of oil annually, and is
successfully developing a gas business
including the Western Surat Gas Project
in Queensland.
For the quarter ending 31 December 2014 9
Quarterly Report
For the quarter ending 31 March 2016 released 27 April 2016 9
Q3 FY16 | March 2016
$ means Australian dollars unless otherwise stated
1P means proved (developed plus undeveloped) reserves in accordance with the SPE PRMS
2P means proved plus probable reserves in accordance with the SPE PRMS
3P proved, probable plus possible reserves in accordance with the SPE PRMS
ASX means the Australian Securities Exchange operated by ASX Limited ACN 008 624 691
ATP means authority to prospect granted under the Petroleum Act 1923 (Qld) or the Petroleum Gas (Production and Safety) Act 2004 (Qld)
AVO means amplitude variation with offset, an enhanced seismic interpretation technique using the changes in seismic reflection amplitude to determine rock-type and fluid content
Barrel/bbl means the standard unit of measurement for all oil and condensate production. One barrel = 159 litres or 35 imperial gallons
boe means barrels of oil equivalent, the volume of hydrocarbons expressed in terms of the volume of oil which would contain an equivalent volume of energy bopd means barrels of oil per day
Bcf means billion cubic feet
Cooper Basin means the sedimentary basin of upper Carboniferous to middle Triassic age in north east South Australia and south west Queensland
Eromanga Basin means the Mesozoic sedimentary basin covering parts of Queensland, the Northern Territory, South Australia and New South Wales
ESP means electric submersible pump
Exploration means drilling, seismic or technical studies to identify and evaluate regions or prospects with the potential to contain hydrocarbons
FY means financial year
GLNG means the Santos GLNG joint venture comprising Santos Limited, Total, PETRONAS and KOGAS.
JV means joint venture
LPG means liquefied petroleum gas
mmbbls means a million barrels
mmboe means a million barrels of oil equivalent
mmscf/d means million standard cubic feet of gas per day
Net pay means the smaller portions of the gross pay that meet local criteria for pay, such as porosity, permeability and hydrocarbon saturation
OGIP means original gas in place
PEL means petroleum exploration licence granted under the Petroleum and Geothermal Energy Act 2000 (SA)
PJ means petajoule
PL means a petroleum lease granted under the Petroleum Act 1923 (Qld) or the Petroleum Gas (Production and Safety) Act 2004 (Qld)
PPL means petroleum production licence granted under the Petroleum and Geothermal Energy Act 2000 (SA)
PRL means petroleum retention licence granted under the Petroleum and Geothermal Energy Act 2000 (SA)
Production is the volume of hydrocarbons produced in production operations (including extended production testing)
Reserve means commercially recoverable resources which have been justified for development, as defined in the SPE PRMS
SACB JV means South Australian Cooper Basin Joint Venture (between Santos, Beach Energy and Origin Energy)
Sales volumes are equal to production less volumes of hydrocarbons consumed in operations (fuel, flare, vent and other shrinkage) and inventory movements
Senex means Senex Energy Limited ABN 50 008 942 827
SPE PRMS means the Petroleum Resources Management System 2007, published by SPE
Surat Basin means the sedimentary basin of Jurassic to Cretaceous age in southern QLD and northern NSW
Tcf means trillion standard cubic feet
TJ means terajoule
GLOSSARY